First ten years with the Bitcoin - Hitecher
Первые десять лет с Bitcoin

First ten years with the Bitcoin

by Phil Haas

Birthday of the first and still main cryptocurrency is considered October 31, 2008, when Satoshi Nakamoto laid out...

Birthday of the first and still main cryptocurrency is considered October 31, 2008, when Satoshi Nakamoto laid out his well-known document describing the work of the new peer-to-peer payment system. Ten years have since then, the Bitcoin has become the instrument of payments, and the capitalization of the crypto market has reached hundreds of billions of dollars.

How did the Bitcoin start the digital revolution in the economy and why is the full transition to digital money still impossible?

Whitepaper — a guarantee of project trust

When creating the new cryptocurrency materials, developers are guided by the principles of openness laid down by Satoshi Nakamoto. Nakamoto outlined the principles of the new network in the document «Bitcoin: P2P electronic cash system», which allows you to get rid of intermediaries such as banks when making transfers. Such documents that describe the project, are used to call the Whitepaper.

Since the Whitepaper is in the public domain any enthusiast can find out how the Bitcoin works. This approach ensures the public audit of the system and guarantees its reliability.

Blockchain launch

Satoshi Nakamoto generated the first block of the network on January 3, 2009. Thus, the blockchain was launched, in which all the blocks are uniquely interconnected, and the first 50 Bitcoin units appeared. The first block is also called the genesis block.

Miners are rewarded for the creation of new blocks, which is halved every 210,000 blocks (approximately every 4 years). The current remuneration is 12.5 BTC.

The reward compensates the cost of miners to calculate the blocks. As a result, when the compensation inherent in the network itself becomes unprofitable, the income of the miners will be exclusively the transaction fees.

Nakamoto completed the first transaction nine days after launch, sending 10 BTC to IT specialist Hal Finney.

Bitcoin becomes a payment method

October 5, 2009, the cost of the Bitcoin was first calculated. Back then one digital coin cost was only $ 0.00076. This amount approximated the energy cost of calculating the 1 BTC.

At that time it was possible to mine even on standard home computers. The increased complexity of the calculations put into the system gradually made mining profitable for large pools only.

Crypto enthusiast Laszlo Hanesh completed the first purchase with the Bitcoins. On May 22, 2010, he paid 10,000 BTC for two pizzas, which corresponded to $ 41 at that time. The community marks this date as the Bitcoin Pizza Day. Now the same amount of BTC is equivalent to about $ 63 million.

Nakamoto’s personality

It is still unknown who is hiding behind the pseudonym of Satoshi Nakamoto. Mysterious creator of the Bitcoin network decided to maintain complete anonymity and communicated with other crypto enthusiasts only on forums or by e-mail.

In December 2010, Nakamoto left the project, and then stopped making transactions using his address.

Many tried to find out who Satoshi Nakamoto is, from Internet users and journalists to the FBI. In 2011, US intelligence agencies conducted a large-scale study and stated that they had finally found out who creator of the Bitcoin is. The study results remained classified, so it is impossible to assess how accurate they are anyway.

In 2014, Newsweek journalists got that they found the real Nakamoto, but Satoshi himself denied the results of the investigation. Several people said that there are creators of the Bitcoin, but did not confirm this.

Forks and independent blockchains

Since the source code of the Bitcoin protocol is open, anyone can participate in its development or use it for their projects. If some developer comes to mind how to strengthen the system, but the idea is not consistent with the general strategy for the development of the Bitcoin, he can fork out the participation. Among the famous forks are: Bitcoin Cash, Bitcoin Gold, Bitcoin SegWit2x, and others. One of the most popular cryptocurrency Litecoin, a known speed of the network, was created as one of the first Bitcoin forks.

There are also cryptocurrencies with an entirely independent blockchain of their own, the creators of which, like Nakamoto, inspired the prospects of using a distributed registry, but used other approaches. One of the most striking examples of such projects is Ethereum.

Secure transactions and a lot of crimes

The main advantages of cryptocurrency are anonymity and security of the transactions. However, despite the reliability of the protocol itself, cryptocurrency thefts occur very often due to problems with the security of applications, and exchanges.

Hackers attacked almost all the crypto exchanges. One of the first famous and large-scale hacks occurred in February 2014, when users of the largest at that time crypto-exchange Mt.Gox lost $ 477 million.

The head of the company, Mark Karpeles, did not admit charges of embezzlement and manipulation, but he was convicted and spent some time in prison.

Such problems are natural for the fast-growing IT companies, and an indicator of the reliability of the exchange is not only the ability to prevent hacking or data leakage but also to respond as quickly as possible and minimize the adverse effect if this happens.

Breakthrough. Bubble. Stability

In 2017, the Bitcoin grew from $ 1,000 to $ 19,500, and over the following months, the price dropped to the current level just above $ 6,000 and has been relatively stable for some time. The rapid growth rate accompanied by a stir in the media, predictions about the future of cryptocurrency made the economists, fintech specialists, and politicians. With the depreciation of the public interest in the Bitcoin also declined.

The current volatility of the BTC / USD rate is less than the stock price of many large companies. Some analysts say that this indicates the maturity of the asset, while others are confident that the Bitcoin can even depreciate.

The further development of the crypto market depends on state regulators.

In particular, many crypto enthusiasts have high hopes for the Bitcoin-ETF launch, as they are confident that the new type of financial instruments will attract many new, more conservative players to the crypto industry.

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